Charles Howden

September 28, 2006

Which would you rather pick up?

Filed under: Uncategorized — Charles @ 7:16 pm

Waiting in the very slow moving queue for the checkout in Marks and Spencer’s last night my sight was drawn to the neat row of “interest arousers” promoting their range of insurance products. I recalled that Tesco’s promote their in a similar way. I suspect they were neat because they were not exactly flying off the shelf. I do not remember ever seeing anyone picking one up in all the many times I have spent waiting at a checkout.

As I waited in the queue, I couldn’t help but think that insurance is a service, or in these cut-priced commoditised days, a product, that is bought grudgingly rather than sold. Customers do not buy their car or household insurance unless they have reached their renewal date, which in the UK means every twelve months. Out of that pre-renewal period, in my experience, domestic consumers will kill, rather than engage in a discussion about domestic insurance products (and I do speak from experience).

Under FSA regulations, renewal papers have to be with customers three weeks before renewal date so, assuming their insurers sent it to them on time, and that customers read their post promptly, 5.7% of customers may be aware that they have a buying need. That’s maybe one out of every twenty customers.

If customers have a house as well as a car to insure they may have a need twice a year. This is a big assumption in town because not every individual will have a house and a car, they may share both with someone else, they may have neither a house nor a car (unlikely in M&S), they may have a company car or not drive at all.

As I think about this, I’m struggling to work the numbers. I thought I could raise the potential buyers to above one in twenty but I’m struggling even to keep it to that level.

Never mind the whole thing about customers not expecting to buy their general insurance from a retailer, I may come back to this on another occasion. Supermarkets struggle to get into this market place, even with commoditised products, partly because customers do not recognise them providers of financial services and general insurance (no suits). The environment is also against them. Having fought your way around the aisles, queued at the checkout, packed your plastic bags, recycled or not, do you really want to spend another ten minutes in that environment talking about a subject you may have discomfort with anyway?

So I would suggest using that valuable space by the checkout to sell or promote something else. Maybe something to bring joy to the heart of a tired, weary, shopper. Small, high margin, impulse buy, along with frequently forgotten items such as razor blades, chocolates, and 250ml bottles of champagne, please add to the list. Which would you rather pick up?

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